Question

Your bank gives you a special loan of $112,000. At the end of 30 years, you will pay the bank $176,400 in simple interest. What is the annual interest rate on your loan? Use the formula: I = Prt.

Answer 1

Find the amount of interest
Interest amount = (176400 - 112000) dollars = 64400 dollarsAs per the formula of simple interest we know thatInterest = Principal * Rate of interest * Time Rate of Interest = (Principal * Time)/Interest amount = (112000 * 30)/64400 = 3360000/64400 = 52.17So the rate of interest on the loan for the period of 30 years was 52.17%